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Health Law and Policy Update Nov. 16, 2012

What's New

Medicaid: Coverage Opportunity

There has been and will continue to be a lot of discussion about the opportunity Colorado has to extend Medicaid coverage to low income people who are not eligible  today. We will be covering this issue through the 2013 legislative session and wanted to start by providing some background information.

The issue:
The Affordable Care Act  (ACA) requires states to expand Medicaid to 138 percent of the Federal Poverty Level (FPL). That's $15,415 annual income for an individual.  However, the United States Supreme Court ruled this summer that states may not be penalized for failing to extend Medicaid coverage. States are waiting for federal guidance about what the Supreme Court's decision means for them.

Eligibility for Health Insurance under the ACA
The ACA requires everyone to have health insurance beginning in 2014, and includes affordability protections designed to insure that people up to 400% FPL (currently about $92,200 a year for a family of four) can comply with this requirement.  Affordability protections include extending Medicaid eligibility to individuals and families with incomes under 138% FPL and offering premium tax support for the purchase of private health insurance for people with incomes between 100% FPL and 400% FPL.

Medicaid was supposed to be the platform for coverage for very low income people and because the ACA assumed the Medicaid expansion, the law includes a provision which says that people with incomes under 100 percent FPL ($11,170 for an individual) are not eligible for premium tax credits.   What this means is that if states, including Colorado, do not extend Medicaid coverage, the lowest income people will be left without coverage.

As a group, these are not people who will be able to purchase private health insurance without assistance.  According to a report
by the Colorado Division of Insurance, the average total single premium in Colorado's individual market in 2010 was $4,630. Even at half that price, individual insurance is out of range for people under 100% FPL.

Colorado Medicaid Eligibility today:
Very few Colorado adults without dependent children (AwDC) are covered under Colorado's Medicaid program today.  While there is statutory authority under HB09-1293 to cover AwDC up to 100 percent FPL, there is not enough money to do so.  Currently, there is only room for 10,000 individuals under 10% FPL (about $90 a month in income) in the program.   

ACA Expansion Funding Opportunity:
If Colorado chooses to extend coverage, the state will receive 100 percent of the cost of doing so from the federal government through federal fiscal year 2017. After that, Colorado will never pay more than 10 percent of the cost of serving these additional Coloradans.

A youtube movie  released by the New Mexico Center on Law and Poverty provides a good look at what can be gained from the expansion. We encourage our readers to check it out! 

Report examines benefits for small businesses under health reform
Starting in 2014, small businesses and their employees will be able to purchase health insurance through the Small Business Health Option Program, or SHOP, exchange.  The SHOP exchange will be a new marketplace for the purchase of small group insurance for employers with up to 50 employees through 2016 and up to 100 employees beginning in 2017.  The SHOP exchange will provide businesses and their employees an expanded array of choices that are currently unavailable in the marketplace.  The SHOP exchange will also relieve small businesses of many of the administrative burdens of shopping for and obtaining coverage for their employees. A new report from The Commonwealth Fund examines health insurance coverage for small businesses and how the Patient Protection and Affordable Care Act (ACA) will improve coverage options for employers and employees.  The report concludes that even though a majority (59 percent) of Americans have health insurance through an employer, employees of small businesses are far less likely to be offered and eligible for health insurance through their jobs and far more likely to be uninsured than employees in larger businesses.  More than half of low-wage employees in small businesses were uninsured at some point during 2010, the report finds.  These workers were far more likely to forgo needed health care treatments.  For employees that are offered health insurance by their employer, the report found that workers in small businesses have far less choice among health plans than workers in larger firms (typically only being offered one plan).  Moreover, health plans offered by small employers offer less adequate benefit packages with greater cost-sharing requirements.

The ACA, according to the report, will improve the affordability and comprehensiveness of coverage for small employers and their employees in several key ways:

  • The SHOP exchange will expand choice for employers and employees so they may obtain the kind of health insurance that meets their needs.  The SHOP exchange will also reduce administrative expenses of employers by facilitating premium payments.
  • Small businesses that offer health insurance to their employees are eligible through 2014 for a tax credit for up to 35 percent of employer's premium contributions.  From 2014-2016 the tax credit will increase to 50 percent.
  • Various insurance market reforms in the ACA help to reduce costs by limiting administrative expenditures among insurance companies and protect individuals by requiring insurers to cover all enrollees regardless of their health status. 
  • Finally, many lower-income and part-time employees may be able to qualify for Medicaid under the ACA's expansion of Medicaid. 

Income gap between rich and poor growing faster in Colorado than in most other states
A new report issued jointly by the Center on Budget and Policy Priorities and The Economic Policy Institute indicates that the income gap in Colorado widened dramatically in the late 1990s and the mid-2000s, ranking Colorado 8th for the fastest growing income disparity across the United States.  For more information about this report, please refer to this recent CCLP news release.